Coach Inc. said its board authorized the buyback of up to $1 billion in common stock, or about 10% of its current market capitalization, by June 2010.
The New York-based maker of handbags and other accessories also announced it had just finished its previous $1 billion buyback, which began in November 2007. During that buyback, Coach acquired 31.8 million common shares at an average of $31.42, including 5.7 million shares at an average of $28.45 since it announced its fourth-quarter earnings last month.
Coach reported a 33% jump in fiscal fourth-quarter net income, driven by higher sales and a favorable tax settlement, but said it wasn't optimistic about the retail environment amid consumer malaise. It also predicted first-quarter and fiscal 2009 earnings below analysts' expectations.
Coach, hedging against potential softness in North America, is trying to take advantage of new wealth in emerging markets, particularly China. The company bought out its distributor in Hong Kong, Macau and China in late May and plans to open 50 new locations in the region over the next five years.
Wall Street Journal; August 26, 2008
